Analyzing 10-Year Mutual Fund Performance: A Snapshot of Returns and Trends

Sumit Desai
Jan 10, 2025

Investing in mutual funds is a popular strategy for long-term wealth accumulation. One of the key metrics investors often examine is the 10-year return, which provides insight into how a fund has performed over a decade. A strong 10-year return can indicate a well-managed fund, while weaker returns may prompt investors to reassess their strategies. In this article, we break down the 10-year return data for a group of 493 mutual funds to understand their performance, trends, and what this means for investors looking to evaluate past growth.

Key Takeaways

  • Out of 493 funds, only 201 funds existed 10-years ago. The average 10-year return for the 201 funds is 14.95%.
  • The majority of mutual funds (52.24%) experienced returns lesser than the average of 14.95%.
  • A substantial portion of funds performed better, with 47.76% reporting returns higher than the average of 14.95%.
  • Out of 201 mutual funds, 1 gave a return of more than 20.95% (14.95% + 6%) and 3 gave a return of less than 8.95% (14.95% - 6%).

10-Year Return Breakdown

The mutual fund returns are grouped into specific ranges, and here's how the distribution looks:

1. Top Performers: Returns Greater than 20.95% - 1 fund (0.50%)
Only 1 fund, Nippon India Small Cap Fund, delivered a return of more than 20.95% at 22.08%, marking it as a true standout over the past decade. Only a tiny fraction of funds manage to hit this mark, making them rare gems in the mutual fund universe.

2. Strong Performers: Between 18.96% and 20.95% - 11 funds (5.47%)
Funds in this range performed solidly, with returns in the high teens to low twenties. While not as exceptional as the 20.95%+ group, these funds nonetheless demonstrated impressive growth. The segment is led by Motilal Oswal Midcap Fund delivering an impressive 20.86% return. Other notable mentions in this group are Aditya Birla Sun Life Digital India Fund (19.77%) and Kotak Emerging Equity Scheme (19.35%)

3. Good Returns: Between 17.96% and 18.95% - 16 funds (7.96%)
A decent proportion of mutual funds managed returns between 17% and 19%. These funds likely provided steady, above-average growth for their investors, making them strong performers but not necessarily market leaders. Notable mentions in this group include ICICI Prudential Technology Fund (18.95%), HDFC Mid-Cap Opportunities Fund (18.45%) and Parag Parikh Flexi Cap Fund (18.2%).

4. Mid-Range Performers: Between 16.96% and 17.95% - 15 funds (7.46%)
These funds returned around 17% on average over the past decade. While slightly lower than the previous category, they still outperformed many other investment options.

5. Consistent Returns: Between 15.96% and 16.95% - 24 funds (11.94%)
Funds that delivered returns between 15% and 17% are in the "consistent performer" category. These funds likely benefited from stable growth and strategic management, generating attractive returns for investors. Only 1 fund from this group managed to shine, SBI Contra Fund (16.35%).

6. Moderate Returns: Between 14.96% and 15.95% - 29 funds (14.43%)
This category includes funds that provided moderate returns over the past decade, ranging from 14.96 to 15.95%. Investors in these funds likely saw steady growth, albeit with less dramatic outperformance compared to the higher categories. A visible contender of performance would be seen in HDFC Flexi Cap Fund (15.36%).

7. Slightly Below Average Returns: Between 13.96% and 14.95% - 32 funds (15.92%)
A large group of funds (15.92%) returned between 13.96% and 14.95%. These funds performed slightly below the average for the entire dataset but still managed to provide positive and steady returns. This is a reassuring category for investors looking for growth without excessive risk. Canara Robeco Blue Chip Equity Fund (14.62%) is a large cap fund that will add stability to any portfolio.

8. Steady Returns: Between 12.96% and 13.95% - 29 funds (14.43%)
Funds returning between 12.96% and 13.95% also represent a significant portion of the mutual fund universe. These returns are still attractive, though they are less impressive compared to the higher-performing funds. Bandhan Focused Equity Fund (13.9%) and HDFC ELSS Tax saver (13.18%) may become a beacon of hope for generating wealth from this group.

9. Middle Performers: Between 11.96% and 12.95% - 23 funds (11.44%)
Funds in this category delivered returns between 11.96% and 12.95%. While these are still positive returns, they are on the lower end of the spectrum for the last decade, indicating a period of slower growth compared to other funds.

10. Modestly Lower Returns: Between 10.96% and 11.95% - 10 funds (4.98%)
A smaller group of funds returned between 10.96% and 11.95%. While these funds still provided positive returns, they performed below the average, likely due to more conservative management or underperformance during certain market cycles.

11. Low Performers: Between 8.96% and 10.95% - 8 funds (3.98%)
These funds provided returns between 8.96% and 10.95%, which, while still positive, reflect relatively weak performance over the past 10 years. Such funds may have struggled in a few market cycles, though they still managed to deliver returns above inflation.

12. Underperformers: Less Than 8.95% - 3 funds (1.49%)
The smallest group of lower than average funds, only 1.49%, saw returns of less than 8.95%. This category indicates funds that underperformed significantly, possibly due to poor market conditions or ineffective management. Although the percentage is low, these funds might have disappointed investors expecting stronger returns. All three funds belong to the sectoral / thematic category focusing on international equity.

Summary and Takeaways

The data reveals a clear trend of moderate to high returns for most mutual funds over the past decade, with the average return standing at 14.95%. Here's a quick summary of the key takeaways:

  • Majority of Funds Perform in Range: About 60% of the mutual funds analyzed saw returns ranging between 12.96% and 16.95%, which can be considered in range of average performance over a 10-year period.
  • Strong Performers Are Rare but Present: A small fraction of funds (around 6%) delivered returns in excess of 18.95%, showing that high-performing funds, while rare, do exist and offer substantial rewards.
  • A Few Underperformers: A minority of funds (around 5.5%) delivered returns below 10.95%, indicating that even in a long-term investment like mutual funds, there is the potential for subpar performance.
  • Diversification Matters: With so much variability in performance, diversification across funds is crucial. Spreading investments across a range of funds can help mitigate risk and ensure that investors benefit from the strong performers while avoiding the underperformers.

In conclusion, mutual funds have proven to be a solid investment option for many, with the majority of funds delivering steady returns. While there are always risks associated with investing, the 10-year return data indicates that investors who chose well-performing funds were likely to have seen respectable growth in their portfolios. As always, past performance is not a guarantee of future results, but the long-term trend is one of consistent positive returns for all funds.